Newsletter July 2017

FIXED INCOME UPDATE - FLAT YIELD CURVE

The slope of the yield curve has been flattening in recent weeks, with short-term rates rising faster than longer bond yields. This typically occurs when monetary policy is tightening. The difference between five-year Treasury notes and 30-year Treasury bonds flattened to 96 basis points in June, the narrowest since December 2007. Five-year note yields, which are highly sensitive to rate policy, rose to a four-week high of 1.80%. Thirty-year bond yields, which are largely driven by future expectations of growth and inflation, meanwhile dropped to 2.72% in mid-June, the lowest since Nov. 9. A key market dynamic are long-term bond prices that are set by the markets, while short-term rates are dictated by the Fed in the form of the Federal Funds rate.

Download "The Fed" e-Book

Global government bonds sold off in late June as language from various central banks alluded to the end of monetary stimulus and a start to rate increases. In reaction, government bonds in Europe, the U.S., and Asia fell in price in anticipation of rising yields.

Securities offered through Coastal Equities, Inc., member FINRA / SIPC. Investment advisory services offered through Woodridge Wealth Management, LLC. Coastal Equities, Inc. is not affiliated with Centric Capital Advisors Inc. or Woodridge Wealth Management LLC. Coastal Equities, Inc. does not provide legal or tax advice, and is not a Certified Public Accounting firm. The above links are provided for your information only. As they are provided by third parties, Coastal Equities, Inc. does not endorse, nor accept any responsibility for the content. Coastal Equities, Inc. does not independently verify this information, nor do we guarantee its accuracy or completeness.

This site is published for residents of the United States only. Registered Representatives and Investment Advisor Representatives of Coastal Equities, Inc. may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed.